is that the top half dozen reasons would account for most of the reduced tax

Is that the top half dozen reasons would account for

This preview shows page 270 - 272 out of 311 pages.

is that the top half dozen reasons would account for most of the reduced tax liability of HWIs. They would be reasons such as depreciation on property, research and development, franking credits and write down of stock to market value. Because the big-ticket items on this list would be small in number, they would be easy for Parliament to digest. Parliament and the people would then have a more realistic understanding of why HWIs pay the level of tax they do. It would be clear why law breaking does not need to be invoked as an explanation. The major reasons would be plain to see. Then governments and electors could make their judgments about whether the economic and other benefits of each reason for the draining away of revenue justify the documented loss of tax receipts. Economic policy decision-making would become more transparent. Confidence in the integrity of government and of HWIs might thereby be enhanced. The adviser’s claim was that this would not be difficult for the taskforce to do: ‘You just list the reasons for adjustment on an Excel spreadsheet and add in the numbers for each taxpayer’. In summary, this policy presumption is that the ATO disclose to Parliament the aggregated accounting income of HWIs, what percentage of this they pay in tax, and the aggregated adjustments responsible for reducing the accounting income to the taxable income, listed in descending order of importance. This would render transparent the share HWIs are or are not paying and why. The following analysis shows why this suggestion might be taken seriously. It is based on the cycle of principled tax reform, followed by a honeymoon when citizens perceive the system as decent, an inevitable creeping of unprincipled elements into the package as a result of global, technological and legal change, followed by rising taxpayer cynicism that ultimately makes the next cycle of reform necessary. One reason the unprincipled elements corrode the system is that legislators do not get feedback on the costs to the revenue of their legislative mistakes. They only become aware of them when the hole is so catastrophic that no one needs an Excel spreadsheet to notice it. But by then the interests entrenched to defend it, the scale of the investments entered into on the assumption that it would continue, may be so massive as to make repair extremely difficult politically. So the rationale for this prescription is that it might extend the
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Through the Eyes of the Advisers 261 honeymoon of confidence and trust in the tax system not only because it would be more transparent but because the transparency would put governments under pressure from Parliament and the people to nip in the bud unjustified corrosions of the tax system before they became gaping holes capable of destroying confidence in the system. By keeping middle Australia’s lens on the tax system clear, it will be slower to change focus from the confidence after reform to cynicism about a system seen as in decay.
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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